Delphi Seeks $6 Billion in Help From GM

From Bloomberg

TROY, MI — Delphi Corp. has asked General Motors Corp. for an aid package worth $6 billion to help avoid a bankruptcy filing, people familiar with the situation said.

Delphi aims to use the cash from GM to reduce expenses by offering some longtime workers bonuses to retire, quit or accept lower pay, the people said. The money would also be used to pay for pensions and health care for the retirees, they said.

GM, the largest customer and former parent of Delphi, is considering a request for assistance, said spokesman Jerry Dubrowski, who wouldn’t confirm the amount or other details. GM’s decision will hinge in part on concessions it wrests from the UAW, the people said. GM is asking unions to help trim $5.6 billion in annual health-care expenses.

“The problem for GM’s labor negotiators is to show the board of directors how helping Delphi will pay for itself,” said analyst Sean McAlinden of the Center for Automotive Research in Ann Arbor, MI.

GM could save $1.4 billion a year on cheaper parts if Delphi buys out its 24,000 high-seniority UAW workers, who receive $27.50 an hour, and replaces them with the new workers making $14 an hour, he said.

Claudia Baucus, a Delphi spokeswoman, said Delphi is seeking assistance from GM; she declined to specify how much. Paul Krell, a spokesman for the UAW, declined to comment.

_______________________________________

Click here to view the rest of today’s headlines.